hey Gerben,
We had a webex with redwood support and figured out that when we place the sqljdbc_auth.dll in the jdbc folder that NW Java refers to, the sapserviceSID user (who run the sap service) can be used with the integrated security to connect to the DB and schedule queries and stored procedures.
The recommendation was to use JDBC 3.0 driver instead of 4.0 and support person kind of said that, version 4.0 is what was causing the JVM crash.
I will try to write up our findings shortly.
Thanks
Nanda